The U.S. crude futures traded 2.1% up at $74.08 a barrel and the Brent contract added 1.5% to $79.03 a barrel

Oil prices settled higher Thursday, as larger-than-expected draw in U.S. crude supplies and easing concerns about the demand outlook helped spur bullish bets.

By 19.30 GMT, the U.S. crude futures traded 2.1% up at $74.08 a barrel and the Brent contract added 1.5% to $79.03 a barrel.

Inventories of U.S. crude dropped by nearly 2.5m barrels in the week ended January 12, surpassing expectations of a draw of 331,000 barrels.

Gasoline inventories, one of the products that crude is refined into, increased by nearly 3.1m barrels against expectations for an rise of around 2.2m barrels while distillate stockpiles gained nearly 2.4m barrels, compared to expectations of an increase of 880,000 barrels.

The International Energy Agency (IEA) stated in its monthly report that it now expects oil demand to grow by 1.24 million barrels per day in 2024, up 180,000 bpd from its earlier projection.

The agency cited improved economic growth and lower crude prices in the fourth quarter.

This followed an even more bullish report from the Organisation of Petroleum Exporting Countries (OPEC), released on Wednesday. The cartel stuck to its forecast for demand growth of 2.25 million bpd for 2024.

At the same time, extreme winter conditions in parts of the U.S. are set to hit production.

The oil producing state of North Dakota said on Wednesday that severely cold weather would see output drop by more than 50% – a trend that is likely to dent overall U.S. production, which hit record highs over the last two months.

The more sanguine outlook helped eased concerns that a weakening global economy would dent demand at a time when ongoing Middle East conflict continued to threaten supplies.